Hanwha Shifts Philly Shipyard to Defence Arm in $5bn US Push
South Korean conglomerate transfers 60% stake to Hanwha Defence USA.
Hanwha Group has restructured the ownership of Philly Shipyard as part of its push to secure U.S. defense contracts, transferring control to its defense-focused subsidiary. The move, announced on 27 October 2026, shifts the yard’s 60% stake from Hanwha Systems to Hanwha Defense USA, a unit of Hanwha Aerospace, while Hanwha Ocean retains the remaining 40%. Retired U.S. Navy Rear Admiral Tom Anderson will oversee the shipyard’s operations as President of Shipbuilding for Hanwha Defense USA.
The Philadelphia-based shipyard, acquired by Hanwha in December 2024 for $100 million, has historically focused on commercial vessels, producing roughly half of all large U.S.-flagged Jones Act ships since 2000. However, it has no prior experience in naval shipbuilding. The company aims to transform the facility into a dual-use yard capable of serving both commercial and military clients, with plans to achieve full U.S. naval shipbuilding certification by 2028.
Financial Struggles and Strategic Investments: philly shipyard
Philly Shipyard has faced persistent financial difficulties, reporting losses for seven straight years before Hanwha’s acquisition. Since taking over, the company has recorded six consecutive quarters of losses, including a $14 million operating loss in the second quarter of 2026. Despite these challenges, Hanwha has committed $750 million in upgrades, $350 million already spent and an additional $400 million approved, with a long-term goal of investing $5 billion to modernize operations.
Hanwha Ocean
The company plans to expand the yard’s production capacity from its current rate of 1.5 ships per year to as many as 20 vessels annually. Recent progress includes a U.S. government contract to build three Missile Range Instrumentation Vessels (MRIV), based on the hull design of training ships previously constructed at the facility. Hanwha has also doubled the workforce to 2,500 employees to support these ambitions.
Obstacles and Leadership Changes
While Hanwha’s strategy hinges on breaking into the U.S. defense market, the shipyard faces significant hurdles. Space constraints at the Philadelphia site, high production costs, and labor shortages have complicated operations. Media reports from South Korea have highlighted frustrations with supply chain disruptions and recruitment challenges, noting that the yard lacks a cost-competitive structure amid limited commercial demand in the U.S.
Hanwha Defense USA CEO Michael Coulter emphasized the company’s commitment to aligning its shipbuilding efforts with national defense priorities. “Bringing the Philly Shipyard under Hanwha Defense USA will further integrate our government and commercial operations,” he stated. “We are investing in facilities and workforce development to prepare for the work ahead.” The company’s broader goal is to position the yard as a key player in U.S. naval shipbuilding, though the timeline for profitability remains uncertain.
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